Reports from market sources indicate that China's Ministry of Commerce (MOC) is thinking of lowering the export rebate rate for HRC, CRC, HDG and other steel products. According to the reports, the MOC is considering the cancellation of the nine percent export rebate rate for HRC and the lowering of the export rebate rate for CRC and HDG from 13 percent to nine percent. Although domestic large and medium scale steelmakers all oppose this policy, the reports say there is still a possibility of it being implemented. The aim of lowering the export rebate rate would be to limit exports of domestic steel products and to assist in the elimination of backward production facilities in China.
According to China's Ministry of Industry and Information Technology (MIIT), in April China exported 4.31 million mt of finished steel, up 205.2 percent year on year, with total finished steel export in January-April reaching 13.02 million mt, up 98.8 percent year on year.
On the other hand, the China Iron and Steel Association (CISA) has stated that it has not received any information about the issue in question from the government authorities, adding that it expects the rebate rate policy to remain unchanged at present. An insider from the CISA stated that government departments often carry out investigations and research into overseas trade issues and seek advice from the CISA; however, the official said that so far the CISA has heard nothing from the government about any possible change in the export rebate rates.
Meanwhile, the CISA official went on to comment that, with raw material prices at present levels, if the rebar price falls below RMB 4,000/mt, steelmakers will incur losses, while they can only make some profit if prices maintain levels of around RMB 4,500/mt. He went on to say that, compared with steel prices in 1994, current finished steel prices have increased by 20 percent, whereas raw material prices have increased several times over.